I am often asked to provide clients with a one page document to record a business relationship, be it for the supply of services or for the sale of goods, or to record a change in the parties’ relationship with each other, for example in a change to a shareholders’ agreement or a change in conditions of a lease.
As simple as some business relationships may sound in summary, there is very little chance of being able to provide a one-page document to provide effectively for any such arrangement. Even a preliminary agreement, such as a non-disclosure agreement (see my relevant article on NDAs here) or a memorandum of understanding would not be able to be reduced to a one-page document. A legal agreement should be seen as a parachute: perhaps a bit cumbersome, but there when you need it most, and not something you would want to cut corners on.
A well-drafted legal document should always contain at least the following clauses in order to ensure enforceability:
- the nature of the relationship (e.g., a sale of goods; provisions of services; appointment as service provider with services to flow from time to time)
- the commencement and duration of the relationship
- payment for goods or services and the terms thereof (30 / 60 days; taxes; interest payable)
- dependencies (what each party needs to do to so the other can perform in terms of the agreement)
- confidentiality and protection of personal information and data
- warranties (general and specific)
- extent of liability of each of the parties (and limitation on liability)
- dispute resolution
- termination and breach
- force majeure implications
- notices to be given and chosen addresses for this purpose
- general legal provisions.
For this last-mentioned provision, this clause itself can take up at least a page of the document and can certainly be said to be the main ‘parachute’ of the document. A well-drafted agreement will ensure that these general legal provisions provide a framework for the other clauses to operate effectively.
In summary, the devil is in the detail and a very short agreement which is light on the intricacies of the relationship between contracting parties can lead to costly litigation down the line if the relationship between the parties breaks down.
The above list is by no means exhaustive, and more specialised documents will contain clauses tailored to provide for the parties’ specific requirements.